ConAgra Foods (NYSE: CAG ), one of America’s leading branded food companies, reported record sales and profits for its fiscal second quarter ended November 26, 2000. Sales rose 8% to $7.2 billion, operating profit increased 25% to $692 million, and net income grew 61% to $302 million. Gross and operating margins expanded substantially over the comparable period last fiscal year. The company attributed the quarter’s performance to three strategies: the recently-completed acquisition of brands such as Chef Boyardee, PAM Cooking Spray, Gulden’s, and Bumble Bee; growth for several key brands and product lines through greater marketing investment; and continued efficiency gains. For the first half of fiscal 2001, sales rose 5% to $14.1 billion, operating profit grew 17% to $1.1 billion, and net income grew 55% to $448 million.
For the quarter, diluted earnings per share reached $.58, which is 9% growth excluding last year’s restructuring charges and 49% growth including last year’s restructuring charges. For the first half of the fiscal year, diluted earnings per share reached $.89, which is 11% growth excluding last year’s restructuring charges and 48% growth including last year’s restructuring charges.
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Bruce Rohde, ConAgra Foods’ chairman and chief executive officer, commented, “We are pleased with our sales and profit growth for the first half of this fiscal year. The changes we have made to our business over the last two years by focusing on customer channels, aggressively addressing costs, and investing more to communicate with our consumers are clearly influencing our financial performance. We posted excellent earnings growth during the quarter despite increased marketing investment and costs associated with numerous new product introductions, higher interest rates, and a higher effective tax rate.”
In the following review of fiscal 2001 second-quarter and year-to-date results, unless otherwise indicated, comparisons are with the corresponding periods of fiscal 2000 and exclude restructuring charges incurred during the fiscal year ended May 28, 2000.
FOOD BUSINESS:
During the quarter, the company’s food business (Packaged Foods and Refrigerated Foods reporting segments) posted sales and operating profit growth of 9% and 23% respectively. Year to date, food sales are up 7% and operating profit has increased 13%.
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By GlobalDataPackaged Foods
For the quarter, sales for ConAgra’s Packaged Foods segment rose 16% to $2.4 billion and operating profit for the segment increased 29% to $398 million. Sales and operating profits for the company’s shelf stable grocery business showed significant gains, largely the result of a broader portfolio following the recent acquisition of International Home Foods. The company’s french fry, seafood, and specialty meat operations, which are focused on the foodservice channel, also posted strong sales and operating profit growth. Marketing investment increased and numerous new products were introduced during the quarter in an effort to accelerate profitable future sales growth. For the first half of this fiscal year, the Packaged Foods business segment has grown sales and operating profit by 8% and 19%, respectively, over the comparable period last fiscal year.
Refrigerated Foods
Sales for the Refrigerated Foods segment increased 5% to $3.4 billion during the quarter and operating profit grew 9% to $154 million. Growing volumes and operating profits for the branded prepared meat business, improved profitability for poultry operations, and efficiency gains for the entire segment drove the segment’s profit increase.
Although the company’s fresh beef and pork operations were less profitable than they were during the comparable period last year due to higher input costs, the Refrigerated Foods business segment grew sales 6% and operating profit 2% for the first half of fiscal 2001.
AGRICULTURAL PRODUCTS:
During the quarter, sales for the company’s Agricultural Products segment were $1.4 billion, up 1% compared to last year, while operating profit improved 33% to $140 million. The increase is primarily due to better trading margins. For the first half of fiscal 2001, sales are flat compared to last year and operating profit has risen 36%.
Mr. Rohde commented on the outlook for the future, “Our sales growth and margin expansion for the first half of this fiscal year speak to our success in developing a richer business model for our shareholders. We believe these measurements will continue to show trendline improvement as our progress develops momentum. Given the changes we have made to our business, we are targeting a long-term trendline of double-digit annual earnings growth, and we are certainly on track with this goal. Because our fiscal third quarter will be marked by numerous new product introductions and sharply increased marketing investment compared to last year, we expect a large portion of our earnings growth for the balance of the fiscal year to occur in our fiscal fourth quarter. With our ability to serve all eating occasions and all eating locations, we are optimistic about our outlook for the second half of this fiscal year and beyond. We are making significant progress toward our goal of becoming America’s favorite food company. This is a great time to be a part of Team ConAgra.”
ConAgra Foods, Inc. (NYSE: CAG) is North America’s largest foodservice manufacturer and second largest retail food supplier, with annualized sales of approximately $27 billion. ConAgra Foods’ consumer brands include: Hunt’s tomato products, Healthy Choice, Banquet, Armour, Bumble Bee, Louis Kemp, La Choy, Wesson, Country Pride, Blue Bonnet, Kid Cuisine, Parkay, Reddi-wip, Marie Callender’s, Cook’s, Swift Premium, Butterball, ACT II, Slim Jim, Decker, Chef Boyardee, Orville Redenbacher’s, PAM Cooking Spray, Snack Pack, Van Camp’s, Peter Pan, Hebrew National and Swiss Miss. For more information, please visit us at www.conagrafoods.com .
Discussion of Results
A discussion of ConAgra Foods’ second quarter and fiscal year-to-date results by Bruce Rohde, chairman and chief executive officer, Jim O’Donnell, executive vice president and chief financial officer, and Chris Klinefelter, vice president of investor relations, will be available today at 9:00 AM Eastern Standard Time. To access the discussion, call toll-free at 1-888-868-9080. On the Internet you may access the discussion at http://www.videonewswire.com/CONAGRAFOODS/122100 and http://www.conagrafoods.com/investors .
A digital replay of the discussion will be available after 10:00 AM Eastern Standard Time at 1-888-371-9536.
ConAgra Foods’ press releases are available through PR Newswire’s Company News On Call Fax Services at 1-800-758-5804. There is no charge for this service. Also, see ConAgra Foods’ web site for recent news at http://www.conagrafoods.com .
Note on Forward Looking Statements:
This news release contains forward-looking statements that reflect management’s current views and estimates of future economic circumstances, industry conditions, company performance, and financial results. The statements are based on many assumptions and factors described in the company’s reports filed with the Securities and Exchange Commission including availability and prices of raw materials, product pricing, competitive environment and related market conditions, operating efficiencies, access to capital and actions of governments. Any changes in such assumptions or factors could produce significantly different results.
- ConAgra Foods, Inc.
- Segment Operating Results
- In millions
SECOND QUARTER – 13 Weeks Ended
Percent
Nov. 26, 2000 Nov. 28, 1999 Change
SALES
Packaged Foods $2,413.7 $2,080.7 16.0%
Refrigerated Foods 3,366.9 3,203.1 5.1
Agricultural Products 1,425.6 1,413.9 .8
Total $7,206.2 $6,697.7 7.6%
OPERATING PROFIT*
Packaged Foods $397.9 $307.6 29.4%
Refrigerated Foods 154.2 141.7 8.8
Agricultural Products 139.8 105.4 32.6
Total $691.9 $554.7 24.7%
RESTRUCTURING & RELATED CHARGES
Packaged Foods $- $68.5 N/A
Refrigerated Foods – 17.8 N/A
Agricultural Products – 18.1 N/A
Total $- $104.4 N/A
*Operating profit is before interest expense, goodwill amortization,
general corporate expense, restructuring and related charges and income
taxes.
ConAgra Foods, Inc.
Segment Operating Results
In millions
FIRST HALF – 26 Weeks Ended
Percent
Nov. 26, 2000 Nov. 28, 1999 Change
SALES
Packaged Foods $4,123.8 $3,813.3 8.1%
Refrigerated Foods 6,799.5 6,419.0 5.9
Agricultural Products 3,158.2 3,170.6 (0.4)
Total $14,081.5 $13,402.9 5.1%
OPERATING PROFIT*
Packaged Foods $600.9 $506.7 18.6%
Refrigerated Foods 263.8 259.5 1.7
Agricultural Products 237.0 174.8 35.6
Total $1,101.7 $941.0 17.1%
RESTRUCTURING & RELATED CHARGES
Packaged Foods $- $97.3 N/A
Refrigerated Foods – 26.0 N/A
Agricultural Products – 28.2 N/A
Total $- $151.5 N/A
*Operating profit is before interest expense, goodwill amortization,
general corporate expense, restructuring and related charges and income
taxes.
ConAgra Foods, Inc.
Consolidated Statements of Earnings
In millions except per share amounts
SECOND QUARTER – 13 Weeks Ended
Percent
Nov. 26, 2000 Nov. 28, 1999 Change
Net sales $7,206.2 $6,697.7 7.6%
Costs and expenses
Cost of goods sold 5,970.9 5,689.1 5.0
Selling, general and
administrative expenses 627.5 599.1 4.7
Interest expense, net 117.3 77.2 51.9
Restructuring/impairment
charges – 30.2 N/A
6,715.7 6,395.6 5.0%
Income before income taxes 490.5 302.1 62.4%
Income taxes 188.8 114.8 64.5
Net income $301.7 $187.3 61.1%
Income per share – basic $0.58 $0.39 48.7%
Weighted average shares
outstanding 520.4 476.2 9.3%
Income per share – diluted $0.58 $0.39 48.7%
Weighted average shares and share
equivalents outstanding 523.9 479.6 9.2%
For the quarter ended November 28, 1999, other restructuring-related items include accelerated depreciation of $33.8 million and inventory markdowns of $25.1 million included in cost of goods sold, and $7.5 million of accelerated depreciation and $7.8 million of restructuring plan implementation costs in selling, general and administrative expenses. ConAgra Foods, Inc. incurred a total of $104.4 million in restructuring and restructuring-related charges across all classifications for the quarter ended November 28, 1999.
- ConAgra Foods, Inc.
- Consolidated Statements of Earnings
- In millions except per share amounts
FIRST HALF – 26 Weeks Ended
Percent
Nov. 26, 2000 Nov. 28, 1999 Change
Net sales $14,081.5 $13,402.9 5.1%
Costs and expenses
Cost of goods sold 11,925.0 11,536.6 3.4
Selling, general and
administrative expenses 1,238.0 1,212.7 2.1
Interest expense, net 192.3 153.6 25.2
Restructuring/impairment
charges – 33.7 N/A
13,355.3 12,936.6 3.2%
Income before income taxes 726.2 466.3 55.7%
Income taxes 278.4 177.2 57.1
Net income $447.8 $289.1 54.9%
Income per share – basic $0.90 $0.61 47.5%
Weighted average shares
outstanding 499.5 474.7 5.2%
Income per share – diluted $0.89 $0.60 48.3%
Weighted average shares and share
equivalents outstanding 502.3 478.6 5.0%
For the 26 weeks ended November 28, 1999, other restructuring-related items include accelerated depreciation of $64.8 million and inventory markdowns of $33.7 million included in cost of goods sold, and $11.5 million of accelerated depreciation and $7.8 million of restructuring plan implementation costs in selling, general and administrative expenses. ConAgra Foods, Inc. incurred a total of $151.5 million in restructuring and restructuring-related charges across all classifications for the 26 weeks ended November 28, 1999.
- ConAgra Foods, Inc.
- Consolidated Balance Sheets
- In millions
Nov. 26, 2000 Nov. 28, 1999
ASSETS
Current assets
Cash and cash equivalents $82.7 $9.5
Receivables, net 2,594.8 2,525.0
Inventories 5,153.2 4,386.3
Prepaid expenses 481.5 294.7
Total current assets 8,312.2 7,215.5
Property, plant and equipment, net 3,966.7 3,559.7
Brands, trademarks and goodwill, net 4,388.7 2,384.1
Other assets 650.2 412.6
Total assets $17,317.8 $13,571.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes payable $3,783.1 $2,761.0
Current installments of long-term debt 65.1 20.5
Accounts payable 2,031.0 2,123.3
Advances on sales 263.2 229.4
Other accrued liabilities 1,606.9 1,467.2
Total current liabilities 7,749.3 6,601.4
Senior long-term debt, excluding
current installments 3,418.6 1,851.1
Other noncurrent liabilities 806.4 799.9
Subordinated debt 750.0 750.0
Preferred securities of a subsidiary company 525.0 525.0
Common stockholders’ equity 4,068.5 3,044.5
Total liabilities and stockholders’ equity $17,317.8 $13,571.9
